Ms SMYTH (La Trobe) (13:01): It is always a privilege to be in this place and to stand here as a member of a Labor government, but never more so than on days like today when I know that my voice and my vote will make a very real difference in a significant national debate and a very real difference in relation to a global threat.

I knew on coming into this place that this government was not going to shy away from these sorts of big debates—debates that had been left aside by our predecessors. These are big debates that, then and now, they have neither the capacity nor the moral courage to address. We all recall that John Howard aspired to a relaxed and comfortable Australia, but in reality what he and his party aspired to then and now was stagnation—a kind of policy stupor that left to one side issues critical to our nation and to our globe. This included the increasingly urgent question of climate change.

When the Howard government finally began to see climate change as possibly an important issue it was in the way that a rabbit might see the headlights of an oncoming truck. But at least I can credit John Howard with recognising that it is a critical issue on which action is required. At least I credit him with respecting the science and some of the economics of the issue. These certainly are not attributes shared by his successors, and certainly not by those on the other side who have very recently contributed to this debate. I have to say that it will be to their great shame when our country inevitably reflects on this debate in the future.

Indeed, we have seen so many members of the former Howard government who originally said that they supported pricing carbon now change their minds to score cheap political points. For instance, one of the last speakers, the member for Goldstein, said on ABC on 27 July 2009:

We are very supportive of a price on carbon. We introduced the scheme to do that.

He went on to say:

… we are serious about good policy in this area. We are serious about a price of carbon.

What a difference a couple of years makes in this debate, so serious is he now about pricing carbon that he is in fact debating on the opposite side of it.

On so many issues Labor has shown that ours is the only party that has both a vision for the future of this country and the tenacity to manage the transition to make that vision a reality. To make ideals and vision a workable reality for all Australians requires that we work with people right across our community. On this issue that has meant dialogue and cooperation with expert scientists and economists, industry, community organisations, farmers and others to achieve a realistic nationwide change.

The bills before us today will make Labor's vision for a clean energy future a reality for every Australian and will contribute to the very real global action against climate change. On that note I might correct some of the views that were put by the most recent speakers from the opposition in this debate, who seem to have missed quite a few fairly significant international events around the issue of carbon pricing and climate change.

For instance, the member for Goldstein remarked that we were 'further away than ever from a new international agreement'. He might be advised that, in Cancun in December 2010, some 89 countries representing 80 per cent of global emissions pledged to take action on climate change. That is hardly evidence of a lack of action, as the opposition increasingly likes to claim. Scores of countries have already started the transformation to a low-pollution economy: 32 countries and a number of US states already have emissions trading schemes. Indeed, Australia's top five trading partners—China, Japan, the US, Korea and India amongst others—have implemented or are piloting emissions trading schemes, carbon taxes and coal taxes at a national, state or city level. We know that New Zealand introduced a trading scheme in 2008, initially covering only forestry, but which in 2010 was expanded significantly to cover the liquid fossil fuels, stationary energy and industrial processes.

We know that China has indicated that it will introduce emissions trading pilot schemes across a number of provinces, including the industrial centres of Beijing, Shanghai and Guangdong. The World Bank has recently indicated that these regional schemes may be expanded to a national scheme by 2015.

So far, from the remarks of the member for Goldstein, the leader of the Nationals and others on the opposition benches asserting that there is seemingly no international action on these matters, it seems that at least the top five of Australia's trading partners are taking meaningful action on climate change and the issue of carbon pollution. Indeed, some 89 countries around the world have pledged their commitment to take meaningful action on climate change.

If we are to meet a target of a five per cent reduction on year 2000 levels by 2020 and an 80 per cent reduction by 2050 we are not going to do it with a piecemeal approach. The problem that we face in climate change calls for concerted, nationwide action and a change in attitudes and behaviour, and these are the attitudes of whole industries, communities and regions. A price on carbon is the way to ensure that fundamental and permanent economic and behavioural changes are made. The coalition has put forward its so-called direct action plan, and we already know that it will rely on $1,300 from every household in every year in order to be implemented. We know that it is not intended to, and will not, change the actions of big polluters. We know that the coalition is not serious about the abatement mechanisms in their policy, because otherwise they would have supported the government's efforts to incentivise farmers and other landholders through the Carbon Farming Initiative to really put an emphasis on abatement mechanisms. When it came time to support real abatement activity, the opposition shirked that responsibility. So essentially we know that the direct action plan will be expensive, poorly targeted and amateurish.

But then there is the important question that has been raised even by members of the opposition themselves: the question about whether the direct action policy would ever be implemented at all or whether it might just be ditched. I believe I am speaking a little earlier in this debate than had been anticipated, because we have had a notable person remove himself from the debate today—namely, the member for Wentworth. I presume that he is revisiting his position in relation to the carbon price as we speak. We heard the member for Wentworth as recently as last year saying in very strong terms that direct action policies on climate change were a 'recipe for fiscal recklessness'. Specifically, he had this to say this year:

… a direct action policy where the Government—where industry was able to freely pollute, if you like, and the Government was just spending more and more taxpayers' money to offset it, that would become a very expensive charge on the budget …

The member for Wentworth is right: it would become a very expensive charge on the budget—an $11 billion charge on the budget, requiring hundreds of public servants to deal with the administration of the plan—and it is still not clear how it might have meaningful carbon abatement effects. So, despite the Leader of the Opposition regularly and loudly pretending that this plan will materialise out of thin air, it is in fact going to be a burden that every taxpayer would share as individuals.

We have also heard a few members of the coalition say that direct action policies are easy to stop if you do not believe in preventing climate change. Indeed, we have heard the member for Wentworth again on this issue, but we have also heard the member for Goldstein say to a forum in Sydney on 19 July this year that their direct action policy could 'be easily adapted'. When the coalition talk about their policies being 'flexible' and 'adaptable', what they mean is that they can be dumped or watered down so much that they will be next to useless.

The final point to make about the rather unfortunate direct action plan is about that little paragraph on page 14 of the document. It reads:

Businesses that undertake activity with an emissions level above their "business as usual" levels will incur a financial penalty. The value of penalties will be on a sliding scale at levels commensurate with the size of the business and the extent to which they exceed their "business as usual" levels.

That is an extraordinary 50 words to avoid using the one word 'tax'. Their own policy includes a tax. We heard the seemingly endless rhetoric of the Leader of the Opposition this morning about the terrible circumstances of legislation imposing taxes, and after all that, buried in the fine print of their very own policy, is a new tax.

Apart from the environmental case for taking economy-wide action on climate change, there is an extremely compelling economic case to make the transition to a clean energy future. A carbon price will generate structural change in our economy by giving industry a reason to adjust, to innovate and to develop low-emissions-intensity products and services. By doing so, it will allow us to break the nexus that currently exists between economic growth and growth in carbon pollution so that our continued prosperity does not rely on the degradation of our environment. Climate change presents consequences for all aspects of our nation's life, from infrastructure to planning to population health to industry to agriculture. For that reason it requires a policy response which generates long-term structural change while maintaining our nation's prosperity.

In fact, Treasury modelling projects real national income per person growing strongly under a carbon price. With a carbon price in place, Treasury estimates that real national income per person would be 16 per cent higher than current levels by 2020. As we have heard in this debate, it also estimates that national employment will increase by 1.6 million jobs by 2020 at the same time as growth in carbon pollution generated in Australia slows. By 2050, it is estimated that a further 4.4 million jobs will have been created—with a carbon price. The modelling goes on to predict a very significant increase in the demand for low-emission goods and production processes once a carbon price is implemented. So a carbon price will see stronger growth in industry sectors which produce those products. Critically, Treasury also estimates that by 2050 the renewable energy sector will be 18 times larger than it is today.

Indeed, local businesspeople in and around my electorate have talked to me about the opportunities that a carbon price presents in encouraging people to look at ways they can be more energy efficient. Phillip Revell runs his own small business, Clean Energy Solar. He has talked about the carbon price helping to 'aid the environment for the future generations, for my kids and my grandkids'. He considers that the Household Assistance Package provides families with the opportunity to make very different choices about the energy they use and the energy efficiency measures that are available to them. Rod Capuano of SolarMyHome, in my electorate, has expressed to me his disappointment that the debate around the carbon price has been so negative.

A carbon price with an emissions trading scheme to follow after three years will give business the certainty needed to invest in infrastructure and innovation. A short fixed-price period will give businesses the price certainty that they need and will provide them with time to adapt and prepare for the fully market based mechanism which will apply from July 2015. Of course, we have heard a number of prominent businesses and businesspeople say that a market mechanism will give investors that certainty: people like Paul Drum of CPA Australia; Gail Kelly of Westpac; David Atkin of Cbus; and Nathan Fabian of the Investor Group on Climate Change, which includes AMP, BT and Colonial and represents funds managers controlling more than half of the superannuation money invested in Australia.

We should not consider the task of making the transition to be something that is beyond us. Our economy is capable of this change. Our industries are capable of this change. We must also consider what a failure to take economy-wide action on carbon would mean for our international trade relationships. We know that global actions to mitigate the effects of climate change are already significant. Already, as I have said, 32 countries have carbon trading schemes. It is reasonable to expect that countries which do take action to curb their carbon emissions will regard high-emissions-generating countries as having an unfair advantage and will seek to impose penalties. Australia should not be exposed to that risk, particularly when we have available to us such a range of renewable energy sources and the capacity to innovate to reduce our emissions levels.

Countries such as China, Japan, the US, Korea and India are taking action. The US is committed to achieving its target to reduce emissions by 17 per cent by 2020 based on 2005 levels. The US EPA is regulating large stationary sources of carbon pollution to reduce emissions and incentivise the uptake of clean-energy technologies, and is increasing fuel-efficiency standards for cars and light trucks. President Obama has committed to establishing a clean-energy standards to double the share of clean energy in the electricity supply mix from 40 per cent to 80 per cent by 2035. I am sure that he can embellish on the actions being taken by his government and various states within the US when he visits here in November.

There is a range of state and regional trading schemes operating or under development including in California, the world's eighth largest economy. Meaningful international action is being taken and Australia certainly should not be left behind in circumstances where it is so capable of responding to the challenges of climate change by innovating and developing industries which are no longer so heavily reliant on highly-polluting technologies and services.

We have a small window of opportunity to act on a growing global risk. The longer we delay meaningful action, the more it will cost to remedy the effects of climate change environmentally and economically and the worse the impacts will be. Whatever others might like to believe, no amount of denial or rage or posturing is going to change that reality. Australia must put a price on carbon.